Sunday, December 25, 2011

Reliance Any Time Money CardIntroduction Debit cards are incredibly handy for daily expenses and general cash withdrawal needs. They provide the flexibility to withdraw cash from ATM or to make purchase at merchant establishments. Initially the use of debit cards was confined to bank accounts.

A traditional Debit Card can be linked to

Saving accounts (relatively low interest rate)

Current account ( Zero interest rate)

Mutual fund schemes such as liquid funds, on the other hand, offer investors market-linked returns by investing into a diversified portfolio of money market / short-term debt instruments.

Reliance Any Time Money Card Reliance Mutual Fund (“RMF”) offers Reliance Any Time Money Card (“the card”), linked to mutual fund schemes offering you instant access to your investments. The card will allow you to withdraw / spend against your own mutual fund investments by providing you access in Visa-enabled ATMs and merchant outlets across the world.

Key Features of Reliance Any Time Money Card

The card offers you the benefit of Mutual Fund Investments along with the convenience of debit cards

You have the choice to withdraw from any scheme linked to the card in HDFC Bank ATMs

In non-HDFC Bank ATMs and PoS terminals, transaction will happen only through Primary Account only

Card will offer instant liquidity up to a permissible limit as fixed / determined by the Bank for ATM cash withdrawals or 50% of the balance in scheme account or Rs. 50,000 (whichever is lower) as set by RMF, per day, from time-to-time

You can spend up to 50% of the balance in the primary scheme account or Rs. 100,000 per day (whichever is lower) at PoS terminals

Sunday, September 25, 2011

I'm not going to write about the obvious topic this week because I don't believe that there's anything new to be said. The shape of things is reasonably clear to every investor and whatever shall be shall be. However, for mutual fund investments, there's an interesting aspect to the current bear cycle that wasn't there earlier. Unlike earlier, Indian mutual funds are receiving significant regular inflows through SIPs ( systematic investment plans). Based on the numbers that I've gleaned by talking to various people in the industry, about 1,500 crore is flowing in through the SIP route into equity funds every month.

I do realise that this not a great level to declare significant - for a potential market of our size, it should be ten times this figure. However, it is at least much larger than it used to be till a short while back. The significance really comes from the experience these new SIP investors are going to have over the next couple of years. Historically, whenever the stock markets are down, Indian investors have never invested in equity. This time it is different.

Over the coming months, a good number of people are going to keep investing steadily in equity every month. This is the core logic of SIP investing - keep investing when prices are down so that you gain when they turn around. This is the buy-low, sell-high action that SIPs deliver automatically. Investors who will continue their monthly investments will eventually realise much higher gains if they stick with it long enough. Each rupee that they put into an equity fund now, at lower NAVs, buys them more units. When the time comes, the cheaper units would have delivered much higher returns, boosting the total returns they get.

Still, what is really important is not the gains themselves but that the impact that I hope this episode will have on the investing culture at large. Maybe I'm being a little optimistic but the experience that the current lot of SIP investors will have could be the seed for a larger change in Indian mutual fund investing.

Think of it this way: 1,500 crore a month could mean 5 lakh investors if each is putting in 30,000 a month. The number could be higher if the investment is lower. 5 lakh investors sounds like a drop in the ocean in a country the size of India, but actually, it's not bad as a seed population. I'm hoping that eventually, the impact on the culture of fund investing (if that's the right word), will be far more significant than the number indicates.

Incidentally, 1,500 crore is also not an insignificant number in terms of the total cash flows into the stock markets. While FIIs may have brought in 5,000 crore or 6,000 crore in one of their better months recently, 1,500 crore is in the same order of magnitude. Everyone connected to the markets keeps complaining that there is no serious retail participation in the stock markets now. However, this 1,500 crore of SIP money flowing into equity is far more important than whatever momentum-driven flows that day-traders used to bring in before 2008.

SIP money is here to stay and will get actually invested in stocks selected on a fundamental basis. By contrast, most day trader money was just flitting in an out of momentum stocks and index F&Os, which may have been better for brokers (hence the moaning) but not for the markets or the investors.

Anyhow, even though the current bear phase will no doubt put a halt to the growth of SIP volumes, it's good to see that the fundamental trend is encouraging. And if you, personally, haven't yet started an equity SIP, then there could hardly be a better time to do that than now.

Wednesday, July 13, 2011

Mangalore, Jul 1: Under pressure from banks like State Bank of India which have a vast network of Automated Teller Machines (ATM) across India, Reserve Bank of India (RBI) has ammended rules governing ATM operations. The grouse of bigger banks is that the customers of various other banks which do not have good ATM network, frequently use their ATMs, resulting in increased ATM maintenance burden on them.

As per the new rules, which have come into effect from Friday July 1, customers can operate their account through other bank ATMs free of cost up to five times a month. The restriction that these five transactions cannot exceed Rs 50,000 per month has also been enforced, with the added clause that other non-financial transactions like balance inquiry, PIN change, and mini statement also are counted in these five transactions, unlike earlier.

At the same time, RBI has stipulated that the banks should credit amounts that remain without being dispensed by the ATMs during attempts by customers because of technical problems into the respective accounts within seven working days from the date of receipt of complaint, instead 12 days stipulated earlier. For each day’s delay thereof, banks will be penalized Rs 100 a day, and the customers need to file their complaints in this respect within 30 days.

As earlier, free services from other bank ATMs will continue to be available only for savings bank account holders and not others. Every transaction over and above the stipulated five will be charged. HDFC Bank has announced that it will charge Rs 20 for every transaction above five per month, and Rs 8.50 per each non-financial transactions. Other banks are also expected to follow suit.

The banks have also been asked to update the customers about the transactions in their accounts through emails and SMS alerts, irrespective of the value of the account. In the past, only transactions above certain limits were conveyed to the customers by banks.

Tuesday, July 5, 2011

Tax planning is an essential part of your financial planning. Efficient tax planning enables you to reduce your tax liability to the minimum. This is done by legitimately taking advantage of all tax exemptions, deductions rebates and allowances while ensuring that your investments are in line with your long term goals.

Yes, it is that time of the year again when we need to prepare tax returns. The July 31 deadline is closer than we think. And, to get us in good shape for filing tax returns here is a handy guide with 10 tips to keep in mind.

Fill out your correct PAN

We come across hundreds of tax filers who fill their wrong PAN details and then get into complications as a result of this carelessness. It might sound obvious, but make sure you put the right PAN details on your form and on any challans used to pay taxes.

An incorrect PAN number might also result in a problem in getting your tax refund quickly. And finally, you might have to pay a penalty of Rs 10,000 for not quoting or mis-quoting your PAN.

In fact, if you attempt to squeeze in your return in the last minute you will cause yourself a lot of stress, and are exposing yourself to careless errors that can be avoided if you were to start the process early and leave enough time to review your return to your satisfaction.

If you have any overdue taxes you can avoid paying penal interest on this overdue liability. By starting early, you are also giving yourself the chance to pay off these dues a lot sooner.

Also, keep in mind that closer to the deadline, the tax department servers get overloaded. If you are choosing to e-file your return, you might get delayed if you can't get connected to the tax department's server.

Fully disclose all sources of income

Why invite trouble by not disclosing all sources of income you might have? With increasing digitisation of financial services and the use of your PAN number for almost all substantial financial transactions, it is easy to investigate what are the different sources of income you might have.

ITR forms require you to declare certain types of large transactions such as:

Even if you don't make these disclosures, it is likely that your counterparty might have already done so, and then the mismatch of disclosure might lead to an investigation into your finances.

1. Single purchase or sale of an immovable property valued at Rs 30 lakh

2. Single payment of Rs 5 lakh or more for acquiring bonds or debentures of a company credit card payments aggregating to Rs 2 lakh or more on a single card

3. Mutual fund purchase aggregating to Rs 2 lakh or more in a single fund

4. Cash deposits aggregating Rs 10 lakh or more in one bank account

5. Single investment of Rs 1 lakh or more in shares of a company

6. Payment aggregating to Rs 5 lakh or more for investment in RBI bonds

State your correct bank details to ensure timely refunds

You can file for a tax refund if you don't have a taxable income and you have faced undue tax deduction. In case you are filing a return for a tax refund, then you need to ensure that you have mentioned your bank details correctly, because the refund amount will be credited directly to your account.

The following details must be correctly stated on your return: Account type -- Savings or Current, account number and MICR code of your bank branch (this is the 9 digit number at the bottom of your cheques).

Thursday, April 28, 2011

Systematic is the word that describes you. Organised, well-managed and planned in all your activities. Whether it is earning, saving or spending, everything is done in a methodical manner. Well… err… except for investing. But then you are not to blame. You never had enough money. Or, sometimes it was shortage of time. If this is the case, then it's time you had a look at the systematic investment plan (SIP) of mutual funds. A SIP is nothing but a planned investment programme, which takes a small sum of money from you and invests it in a mutual fund at regular intervals. The minimum amount can be as small as Rs 500 and the frequency of investment is usually monthly or quarterly. This simple programme has a number of advantages.

First, if saving is an arduous task for you, then SIP can do this for you. Money deducted from your account (through post-dated cheques) and invested is money you cannot spend. And a rupee saved is a rupee earned. Even if each investment is small, over time this can add up to a neat kitty. And the power of compounding can do wonders. In due course of time, a small amount can grow into a significant amount. More importantly, an SIP does away with the need or effort to time the market. When the market is falling you may feel that it may decline further and that you should wait a while. Often stock markets make a recovery before you notice and the opportunity is lost. When markets are rising it is scary to invest money. Isn't it better that you wait for a correction and then make an investment? But if the correction doesn't come about, then even this opportunity is missed. And if markets are going nowhere, then what is the point in investing at all?

So, trying to find out which is the best time to invest can be a tough task. And that's why it is said that timing the market is futile. If one could take advantage of the ups and downs that markets encounter, it would be great. And this is where SIP fits in. By the process of regular investing one gets to invest in the highs as well as the lows, and this helps in averaging out the volatility in the market.

Some mutual funds suggest that contribution to an SIP programme should be increased in a full-fledged bear market. While this may be emotionally difficult, it can be rewarding when markets recover. But then this appears very much like timing the market and the purpose of an SIP is to avoid this effort.

Thus, an SIP imparts discipline to investing. Whether it is the regular act of saving or investing, an SIP does both automatically. While there are certain benefits of an SIP please remember it is no wonder drug that cures all investment-related ailments.

An SIP does not guarantee returns or positive returns. If you opt for an SIP in a falling market and the market continues to fall, then your investments will suffer a loss on the whole. An SIP does not guarantee a better return than a one-time investment. If you made a one-time investment when the Sensex was at 2,834 points in October 2002, then this would have performed better as compared to carrying out an SIP by spreading the investment over a period of time.

The emphasis on averaging out in an SIP obviously makes it most useful in case of an equity fund, as the volatility is greater here. An SIP can be useful for a debt fund as well...to help build a pool of savings. It can be thought of something akin to a recurring deposit where a part of your savings is automatically deducted from your account.

Overall, an SIP is a simple device that helps you to save and invest in a disciplined manner without having to time the market.

Wednesday, April 27, 2011

Fact No. 1: Over a long term horizon, equity investments have given returns which far exceed those from the debt based instruments. They are probably the only investment option, which can build large wealth. Fact No. 2: In short term, equities exhibit very sharp volatilities, which many of us find difficult to stomach. Fact No. 3: Equities carry lot of risk even to the extent of loosing ones entire corpus. Fact No. 4: Investment in equities require one to be in constant touch with the market. Fact No. 5: Equity investment requires a lot of research. Fact No. 6: Buying good scrips require one to invest fairly large amounts.

Systematic Investing in a Mutual Fund is the answer to preventing the pitfalls of equity investment and still enjoying the high returns. And it makes all the more sense today when the stock markets are booming.

1. It’s an expert’s field – Let’s leave it to them

Management of the fund by the professionals or experts is one of the key advantages of investing through a mutual fund. They regularly carry out extensive research- on the company, the industry and the economy – thus ensuring informed investment. Secondly, they regularly track the market. Thus for many of us who do not have the desired expertise and are too busy with our vocation to devote sufficient time and effort to investing in equity, mutual funds offer an attractive alternative. (Read more - The Investors biggest Dilemma)

2. Putting eggs in different baskets

Another advantage of investing through mutual funds is that even with small amounts we are able to enjoy the benefits of diversification. Huge amounts would be required for an individual to achieve the desired diversification, which would not be possible for many of us. Diversification reduces the overall impact on the returns from a portfolio, on account of a loss in a particular company/sector.

3. It’s all transparent & well regulated

The Mutual Fund industry is well regulated both by SEBI and AMFI. They have, over the years, introduced regulations, which ensure smooth and transparent functioning of the mutual funds industry. This makes it safer and convenient for investors to invest through the mutual funds. (Check out - Foolproof strategies to maximize your profits)

4. Market timing becomes irrelevant

One of the biggest difficulties in equity investing is WHEN to invest, apart from the other big question WHERE to invest. While, investing in a mutual fund solves the issue of ‘where’ to invest, SIP helps us to overcome the problem of ‘when’. SIP is a disciplined investing irrespective of the state of the market. It thus makes the market timing totally irrelevant. And today when the markets are high, it may not be prudent to commit large sums at one go. With the next 2-3 years looking good from Indian Economy point of view, one can expect handsome returns thru’ regular investing.

5. Does not strain our day-to-day finances

Mutual Funds allow us to invest very small amounts (Rs 500 – Rs 1000) in SIP, as against larger one-time investment required, if we were to buy directly from the market. This makes investing easier as it does not strain our monthly finances. It, therefore, becomes an ideal investment option for a small-time investor, who would otherwise not be able to enjoy the benefits of investing in the equity market.

6. Reduces the average cost

In SIP we are investing a fixed amount regularly. Therefore, we end up buying more number of units when the markets are down and NAV is low and less number of units when the markets are up and the NAV is high. This is called rupee-cost averaging. Generally, we would stay away from buying when the markets are down. We generally tend to invest when the markets are rising. SIP works as a good discipline as it forces us to buy even when the markets are low, which actually is the best time to buy.

7. Helps to fulfill our dreams

The investments we make are ultimately for some objectives such as to buy a house, children’s education, marriage etc. And many of them require a huge one-time investment. As it would usually not be possible raise such large amounts at short notice, we need to build the corpus over a longer period of time, through small but regular investments. This is what SIP is all about. Small investments, over a period of time, result in large wealth and help fulfill our dreams & aspirations.

Saturday, April 9, 2011

Kisan Bapat Baburao Hazare (born 15 January 1940), popularly known as Anna Hazareis an Indian social activist who is especially recognized for his contribution to the development of Ralegan Siddhi, a village in Parner taluka of Ahmednagar district, Maharashtra, India and his efforts for establishing it as a model village, for which he was awarded the Padma Bhushan by the Government of India in 1992.

On 5 April 2011, Hazare started a 'fast unto death' to exert pressure on the Government of India to enact a strong anti-corruption act as envisaged in the Jan Lokpal Bill, a law that will establish a Lokpal (ombudsman) that will have the power to deal with corruption in public offices. The fast led to nation wide protests in support of Hazare. The fast ended on 9 April 2011. All of his demands of the movement are agreed by the Government of India and Government issued a gazette notification on formation of a joint committee headed by senior minister Pranab Mukherjee to draft an effective Lokpal Bill.

Early life

Anna Hazare was born on 15 January 1940 in a small village, Bhingar, near Ahmednagar city in India. Anna's father Baburao Hazare worked as an unskilled labourer in Ayurveda Ashram Pharmacy. Anna's grandfather was in the army and was posted at Bhingar when Anna was born. He died in 1945 but Anna's father continued to stay at Bhingar. In 1952 Anna's father resigned from his job and returned to his own village, Ralegan Siddhi. At that time Anna had completed his education upto 4th standard and had six younger siblings. It was with great difficulty that Anna's father could make two ends meet. Anna's aunt (father's sister) took Anna to Mumbai. She was childless and she offered to look after him and his education.

Anna studied upto the 7th standard in Mumbai. He took up a job after the 7th standard in consideration of the economic situation back home. Anna's father at Ralegan had to work as a daily wage labourer and found it difficult to sustain his family. He was slipping deeper and deeper into debt. He had to sell off one part of his land and mortgage the other. Anna started selling flowers at Dadar in order to make his living. But Anna's working at somebody's shop for Indian Rupee40 a month was not enough. After gaining some experience, he started his own shop and even brought two of his brothers to Mumbai. Gradually Anna's income went up to Indian Rupee 700 to Indian Rupee 800 per month.

In a couple of years Anna fell into bad company and started wasting his time and money on vices. He also started getting involved in brawls and fights, especially when he found some simple person being harassed by goondas. He became irregular in sending money to his family. The word went around in Ralegan that he had become a bad character himself. In one such fight, Anna bashed up a person rather badly. Fearing arrest, he avoided coming to his regular work and residence for some time. During this period (in April 1960) he appeared in Army recruitment interviews and was selected to join the Indian Army.

In the Indian Army

Anna Hazare started his career as a driver in the Indian Army. He spent his spare time reading the books of Swami Vivekananda, Mahatma Gandhi and Acharya Vinoba Bhave that inspired him to become a social worker and activist.[4] During the Indo-Pakistani War of 1965, he was the only survivor in a border exchange of fire, while driving a truck.During the mid-1970s he was again involved in a road accident while driving.

In Ralegan Siddhi

After voluntary retirement from the army, Hazare came to Ralegan Siddhi village in 1975. Initially, he organized the youth of the village into an organization named the Tarun Mandal (Youth Association). He also helped to form the Pani Puravatha Mandals (Water Supply Associations) to ensure proper distribution of water.

Uprooting alcoholism

As the next step towards social and economic change, Anna Hazare and the youth group decided to take up the issue of Alcoholism. It was very clear that there could be no progress and happiness in the village unless the curse of alcoholism was completely removed from their lives. At a meeting conducted in the temple, the villagers resolved to close down the liquor dens and ban the drinking of alcohol in the village. Since these resolutions were made in the temple, they became in a sense religious commitments. Over thirty liquor brewing units were closed by their owners voluntarily. Those who did not succumb to social pressure were forced to close down their businesses, when the youth group smashed up their liquor dens. The owners could not complain as their business was illegal.[8]

Though the closure of liquor brewing reduced alcoholism in Ralegan Siddhi, some villagers continued to drink. They obtained their liquor from neighboring villages. The villagers decided that those men would be given three warnings, after which they would be physically punished. Twelve men who were found in a drunken state even after initial warnings were tied to a pole with help from the youth group and flogged. Anna Hazare says, “Doesn’t a mother administer bitter medicines to a sick child when she knows that the medicine can cure her child? The child may not like the medicine, but the mother does it only because she cares for the child. The alcoholics were punished so that their families would not be destroyed.”[citation needed]

Anna Hazare appealed to the government of Maharashtra to bring in a law whereby prohibition would come into force in a village if 25% of the women in the village demanded it. In July 2009, the state government issued a government resolution amending the Bombay Prohibition Act, 1949. As per the amendments, if at least 25% of women voters demand liquor prohibition through a written application to the state excise department, voting should be conducted through a secret ballot. If 50% of the voters vote against the sale of liquor prohibition should be imposed in the village and the sale of liquor should be stopped. Similar action can be taken at the ward level in municipal areas. Thereafter, another circular was issued, making it mandatory to get the sanction of gram the sabha for issuing new permits for sale of liquor. In some instances, when women agitated against the sale of liquor, cases were filed against them. Anna took up the issue again and in August 2009 the government issued another circular that sought withdrawal of cases against women who sought prohibition of liquor in their villages.[9]

Along with the removal of alcohol from the village, it was decided to ban the sale of tobacco, cigarettes and beedies. In order to implement this resolution, the youth group performed a unique "Holi" twenty two years ago. The festival of Holi is celebrated as symbolic burning of evil. The youth group brought all the tobacco, cigarettes and beedies from the shops in the village and burnt them in ‘Holi’ fire. From that day, no tobacco, cigarettes, or beedies are sold in any shop at Ralegan Siddhi. Today there is not a single shop in Ralegaon Siddhi selling cigarettes or bidis. [10][11][12]

The Watershed Development programme

Anna Hazare realized that the only way to increase agricultural production in a sustainable manner was to build a better irrigation system. Taking into account the geographical location of Ralegan , located in the foothills, Anna Hazare persuaded villagers to construct a watershed embankment to stop water and allow it to percolate and increase the ground water level. He motivated the residents of the village into shramdan (voluntary labour) to build canals, small-scale check-dams and percolation tanks in the nearby hills for watershed development; efforts that solved the problem of scarcity of water in the village that also made irrigation possible.[4][6] The first embankment that was built using volunteer efforts developed a leak and had to be reconstructed this time with government funding.

Hazare also took steps to stop the second big problem, soil erosion. In order to conserve soil and water by checking the run off, contour trenches and gully plugs were constructed along the hill slopes. Grass, shrubs and about 3 lakh ( 300,000) trees were planted along the hillside and the village. This process was supplemented by afforestation, nullah bunds, underground check dams and cemented bandhras at strategic locations. The Watershed Development programme became a huge success and helped increase the fortunes of many farmers as they now had a reliable source of water. Ralegan has also experimented with drip and bi-valve irrigation in a big way. Papaya, lemon and chillies have been planted on a plot of 80 acres (320,000 m2) entirely irrigated by the drip irrigation system. Cultivation of water-intensive crops like sugar cane was banned. Crops such as pulses, oilseeds and certain cash crops with low water requirements were grown. The farmers started growing high yield varieties of crop and the cropping pattern of the village also changed. He has helped farmers of more than 70 villages in drought-prone regions in the state of Maharashtra since 1975.[13]

The Government of India plans to start a training centre here to understand and implement Hazare's watershed development model in other villages in the country.[14]

Milk production

As a secondary occupation, milk production was promoted in Ralegan Siddhi. Purchase of new cattle and improvement of the existing breed with the help of artificial insemination and timely guidance and assistance by the veterinary doctor has resulted in an improvement in the cattle stock. The milk production has also increased. Crossbred cows are replacing the local ones which give a low milk yield. The number of milk cattle has also been growing, which resulted in growth from one hundred liters (before 1975) to Around 2500 litres per day which is sent to a co-operative dairy (Malganga Dairy) in Ahmednagar. Some milk is also given to Balwadi (kindergarten) children & neighboring village under the child nutrition program sponsored by the Zilla Parishad.[15]

From the surplus generated, the milk society bought a mini-truck and a thresher. Besides transporting milk to Ahmednagar, the mini-truck is also used for taking vegetables and other produce directly to the market, thus eliminating intermediate agents. The thresher is rented out to the farmers during the harvesting season.[citation needed]

Education

In 1932 Ralegan Siddhi got its first formal school, a single class room primary school. In 1962, the villagers added more classrooms through community volunteer efforts. By 1971 out of an estimated population of 1209, only 30.43% were literate (72 women and 290 men). Boys moved to the nearby towns of Shirur and Parner to pursue higher education, but due to socioeconomic conditions, girls could not do the same and were limited to primary education. Anna Hazare along with the youth of Ralegan siddhi worked to increase literacy rates and education levels. In 1976 they started a pre school for the primary school and a high school in 1979. The villagers started taking active interest in the village school and formed the Sant Yadav Baba Shikshan Prasarak Mandal (Charitable trust), which was registered in 1979.[16] The trust decided to take over the function of the village school which was in a bad state due to government neglect and also lack of interest on behalf of teachers who were moonlighting.

The trust obtained a government grant of 4 lakhs (400,000 rupees) for the school building using the National rural education program (NREP). A new school building was built in the next 2 months with volunteer efforts and the money obtained via the grant. A new hostel was also constructed to house 200 students from poorer sections of society. After the opening of the school in the village, a girl from Ralegan Siddhi became the first female in the village to complete her SSC in 1982.[10] Since then the school has been instrumental in bringing in many of changes to the village. This school has a hostel for 150 boarders. Traditional farming practices are tought in this school in addition to the government curriculum.[6]

Removal of untouchability

The social barriers that existed due to the caste system have been broken down by Ralegan Siddhi villagers and people of all castes come together to celebrate social events. The people of Ralegan have largely succeeded in eradicating social discrimination on the basis of caste. The dalits have been integrated into the social and economic life of the village. The villagers have built houses for the Harijans and Dalits, and helped to repay their loans to free them from their indebtedness.[16]

Collective marriages

Most rural poor get into a debt-trap as they have to incur heavy expenses at the time of marriage of their son or daughter. It is an undesirable practice but has almost become a social obligation in India. Ralegan's people have started celebrating marriages collectively. The feast is held together where the expenses are further reduced by the Tarun Mandal taking the responsibility for cooking and serving the food. The vessels, the Loudspeaker system, the mandap and the decorations have also been bought by the Tarun Mandal members belonging to the oppressed castes. From 1976 to 1986, 424 marriages have been held under this system.[16]

Gram Sabha

The Gram sabha is an important forum for collective decision making in the villages in India. If villagers are involved in the planning and decision making process, they are more open to any changes taking place in the village. Anna campaigned between 1998 and 2006 for amending the Gram Sabha Act, so that the people (meaning the the villagers) have a say in the development works in their village. While the state government refused to bend to his demand, it had to give in due to public pressure. As per the amendments, seeking sanction of the gram sabha (collective of villagers, and not just the few elected representatives in the gram panchayat) for expenditure on development works in the village, is mandatory. In case of expenditure without the sanction of the gram sabha, 20% of gram sabha members can lodge a complaint to the chief executive officer of the zilla parishad with their signatures. The chief executive officer is required to visit the village and conduct an inquiry within 30 days and submit the report to the divisional commissioner, who has powers to remove the sarpanch or deputy sarpanch and dismiss the gram sevak involved. Anna was not satisfied, as the amended Act did not include "the right to recall a sarpanch". He insisted that this should be included and the state government relented.[9]

In Ralegan Siddhi, the Gram Sabha meetings are held periodically to discuss issues relating to the welfare of the village. Projects like Watershed development activities are undertaken only after they are discussed in the Gram Sabha. All decisions like Nasbandi, Nasabandi(bans on alcohol), Kurhadbandi (bans on tree felling), Charai bandi(bans on grazing), and Shramdan were taken in the Gram Sabha. Decisions are taken in a simple majority consensus. In case of a difference of opinion the majority consensus becomes acceptable. The decision of the Gram Sabha is accepted as final.

In addition to panchayat, there are several registered societies that take care of various projects and activities of the village. Each society presents its annual report and statement of accounts in the Gram Sabha every year. The Sant Yadavbaba Shikshan Prasarak Mandali monitors the educational activities. The Vivid karyakari society gives assistance and provides guidance to farmers regarding fertilizers, seeds, organic farming, financial assistance, etc. Sri Sant Yadavbaba Doodh Utpadhak Sahakari sansta gives guidance regarding the dairy business. Seven Co-operative irrigation society provides water to the farmers from cooperative wells. Mahila Sarvage Utkarsh Mandal attends the welfare needs of the women.

Anti-corruption protests in Maharashtra

In 1991, Hazare launched the Bhrashtachar Virodhi Jan Aandolan (Peoples' Movement against Corruption), an popular movement to fight against corruption.[17]

In May 1997, Hazare protested against the alleged malpractices in the purchase of powerlooms by the Vasantrao Naik Bhathya Vimukt Jamati Vikas Manch and the Mahatma Phule Magasvargiya Vikas Mandal. These institutions were directly under the charge of then Maharashtra Social Welfare minister Babanrao Gholap of the Shiv Sena, since their managing committees were dissolved after the Shiv Sena-BJP government came to power in the state in 1995. Hazare also raised the issue of alleged massive land purchase by Gholap's wife Shashikala in Nashik between April to September 1996. He forwarded the available documentary evidences in support of his allegations to then Maharashtra Governor P. C. Alexander.[18] On 4 November 1997, Gholap filed a defamation suit against Hazare for accusing him of corruption. He was initially arrested in April 1998 and was released on a personal bond of Rs 5,000.[19] On 9 September 1998, Anna Hazare was imprisoned in the Yerawada Jail after being sentenced to simple imprisonment for three months by the Mumbai Metropolitan Court.[5][20] The sentencing came as a huge shock at that time to all social activists. Leaders of all political parties except the BJP and the Shiv Sena came in support of him [21][22] Later due to public protests, the Government of Maharashtra ordered his release from the jail.[23]

In 2003, the corruption charges were raised by Hazare against 4 ministers of the Congress-NCP government belonging to the NCP.[24] He started his 'fast unto death' on 9 August 2003. He ended his fast on 17 August 2003 after then chief minister Sushil Kumar Shinde formed a one man commission, headed by the retired justice P. B. Sawant to probe his charges.[25] The P. B. Sawant commission report, submitted on 23 February 2005, indicted Suresh Jain, Nawab Malik and Padmasinh Patil. The report exonerated Vijaykumar Gavit.[26][27] Suresh Jain and Nawab Malik resigned from the cabinet in March 2005.[28]

Right to Information movement

In the early 2000s, Anna Hazare led a movement in Maharashtra state, which forced the Government of Maharashtra to repeal the earlier weak act and pass a stronger Maharashtra Right to Information Act. Law professor Alasdair Scott Roberts mentions,

“The state of Maharashtra - home to one of the world's largest cities, Mumbai, adopted a Right to Information Act in 2003, prodded by the hunger strike of prominent activist, Anna Hazare. ("All corruption can end only if there is freedom of information," said Hazare, who resumed his strike in February 2004 to push for better enforcement of the Act).[29] ”

This Act was later considered as the base document for the Right to Information Act 2005 (RTI), enacted by the Union Government. It also ensured that the President of India assented to this new Act.[30]

Lokpal Bill movement

On 5 April 2011, Anna Hazare initiated a movement for passing a stronger anti-corruption Lokpal (ombudsman) bill in the Indian Parliament. As a part of this movement, N. Santosh Hegde, a former justice of the Supreme Court of India and Lokayukta of Karnataka, Prashant Bhushan, a senior lawyer in the Supreme Court along with the members of the India Against Corruption movement drafted an alternate bill, named as the Jan Lokpal Bill (People's Ombudsman Bill) with more stringent provisions and wider power to the Lokpal (Ombudsman).[31] Hazare began a fast unto death from 5 April 2011 at Jantar Mantar in Delhi, to press for the demand to form a joint committee of the representatives of the Government and the civil society to draft a new bill with stronger penal actions and more independence to the Lokpal and Lokayuktas (Ombudsmen in the states), after his demand was rejected by the Prime Minister of India Manmohan Singh [32] Before commencing his 'fast unto death' he stated, "I will fast until Jan Lokpal Bill is passed".[33]

The movement attracted attention very quickly through various media. It has been reported that thousands of people joined to support Hazare's effort. Almost 150 people reportedly joined Hazare in his fast.[34] He said that he would not allow any politician to sit with him in this movement. Politicians like Uma Bharti and Om Prakash Chautala were shooed away by protesters when they came to visit the site where the protest was taking place.[35] A number of social activists including Medha Patkar, Arvind Kejriwal and former IPS officer Kiran Bedi, Jayaprakash Narayan of the Lok Satta have lent their support to Hazare's hunger strike and anti-corruption campaign. This movement has also been joined by many people providing their support in Internet social media such as twitter and facebook. In addition to spiritual leaders Sri Sri Ravi Shankar, Swami Ramdev, Swami Agnivesh and former Indian cricketer Kapil Dev,[36] many celebrities showed their public support through micro-blogging site Twitter.[37] As a result of this movement, on 6 April 2011 Sharad Pawar resigned from the group of ministers formed for reviewing the draft Lokpal bill 2010.[38]

The movement gathered significant support from India's youth visible through the local support and on social networking sites like Facebook and Twitter.[39] There have also been protests in Bangalore, Mumbai, Chennai, Ahmedabad, Guwahati, Shillong, Aizawl among other cities of India.[40]

On 8 April 2011, the Government of India accepted all demands of the movement. On 9 April 2011 it issued a notification in the Gazette of India on formation of a joint committee. It accepted the formula that there be a politician chairman and an activist, non-politician Co-Chairman. According to the notification, Pranab Mukherjee will be the Chairman of the draft committee while Shanti Bhushan will be the co-chairman. “The Joint Drafting Committee shall consist of five nominee ministers of the Government of India and five nominees of the civil society. The five nominee Ministers of the Government of India are Pranab Mukherjee, Union Minister of Finance, P. Chidambaram, Union Minister of Home Affairs, M. Veerappa Moily, Union Minister of Law and Justice, Kapil Sibal, Union Minister of Human Resource and Development and Minister of Communication and Information Technology and Salman Khursheed, Union Minister of Water Resources and Minister of Minority Affairs. The five nominees of the civil society are Anna Hazare, N. Santosh Hegde, Shanti Bhushan Senior Advocate, Prashant Bhushan, Advocate and Arvind Kejriwal.[41][42]

On the morning of 9 April 2011 Anna Hazare ended his 97-hour hunger strike by first offering water to some of his supporters who had gone on a hunger strike in his support. The social activist then broke his fast by consuming some water. He addressed the people and set a deadline of 15 August 2011 to pass the Lokpal Bill in the Indian Parliament.

“ Real fight begins now. We have a lot of struggle ahead of us in drafting the new legislation, We have shown the world in just five days that we are united for the cause of the nation. The youth power in this movement is a sign of hope.[43] ”

Anna Hazare also said that if the bill was not passed, then he will call a mass nation-wide agitation.[44][43] He called his movement as "second struggle for independence" and he will continue the fight.[45]

Awards and honours

Awards - received by Anna Hazare

* 2008 - On 15 April 2008, Anna Hazare received the World Bank's 2008 Jit Gill Memorial Award for Outstanding Public Service: "Hazare created a thriving model village in Ralegan Siddhi, in the impoverished Ahmednagar region of Maharashtra state, and championed the right to information and the fight against corruption."[46]

* 1992 - Padmabhushan award, by the Government of India

* 1990 - Padmashri award, by the Government of India

* 1989 - Krishi Bhushana award by the Government of Maharashtra.

* 1986 - Indira Priyadarshini Vrikshamitra award by the Government of India on 19 November 1986 from the hands of Prime Minister of India Rajiv Gandhi.

Felicitations: He was felicitated by the Ahmednagar Municipal Corporation on 15 January 1987 and by the Pune Municipal Corporation also.

Expenditure in 2011-12 is estimated at Rs 12,57,729 crore, an increase of 13.4%.

Revenue deficit fixed at 2.3% in revised estimates of 2010-11 and 1.8% in 2011-12.

Tax reductions to result in revenue loss of Rs 11,500 crore

INFLATION: The finance minister opened his speech with reference to inflation saying that food inflation came down from 20.2% last year to 9.3% in January 2011 but it was still a matter of concern. "Government's principle concern is high food prices... food prices were high for cereals, there was a spurt in prices of onions and milk," he said. ( Inflation remains principal concern, to fall next year )

AGRICULTURE: In what may be a big relief for farmers, the FM said credit flows to farmers will be raised from Rs 3.75 lakh crore to Rs 4.75 lakh crores and the allocation under Rashtriya Krishi Vikas Yojana will be raised from Rs 6755 crore in the current year to Rs 7860 crore. ( Farm loans at 4%; credit target raised to Rs 4,75,000cr )

An additional Rs 300 cr will be provided to promote pulses cultivation in rain-fed areas and another Rs 300 cr to promote farm product cultivation.

In joy for anganwadi workers, their remuneration is being raised from Rs 1500 to Rs 3,000 per month. Anganwadi helpers will get Rs 1,500 from Rs 750, Pranab said. ( Social spending to be raised by 17% )

Old age pension to persons of over the age of 80 will be raised from Rs 200 to Rs 500.

DEFENCE: The finance minister has allotted Rs 1.64 lakh crore for defence saying that more will be given if required. (11% hike in defence allocation)Rs 9 lakh compensation will be given to men of defence and central paramilitary forces for permanent disability and on being discharged from service. (Rs 9 lakh disability compensation for defence personnel)

INCOME TAX: No change in tax slabs has been proposed. The tax exemption limit for general category has been raised from Rs 1,60,000 to Rs 1,80,000. ( Tax limit enhanced from Rs 1,60,000 to Rs 1,80,000)

No change in tax exemption limit for women.

For senior citizens, exemption age limit has been reduced from 65 to 60. Their tax exemption limit will be Rs 2,50,000.

Apart from this, a new exemption bracket has been created for those above 80 years of age. Their tax exemption limit will be Rs 5,00,000.

Surcharge for companies cut to 5 per cent, from 7.5 per cent. (Corporate Tax surcharge reduced to 5%)

A new revised income tax return form 'Sugam' to be introduced for small tax papers.

DIRECT TAX: The FM announced that Direct Tax Code will be implemented from April, 2012 and the Goods and Services Tax Bill is to be introduced in Parliament this year. ( Direct Taxes Code to be implemented from April 1, 2012 )

Goods and services tax bill in budget session: Pranab Mukherjee

SERVICE TAX: Service tax widened to cover hotel accommodation above Rs 1,000 per day, A/C restaurants serving liquor, some category of hospitals, diagnostic tests.Service tax on air travel increased by Rs 50 for domestic travel and Rs 250 for international travel in economy class. On higher classes, it will be 10% flat. ( Service tax on air travel increased )

EXCISE AND CUSTOMS DUTY: There is a proposal to introduce self-assessment of customs duty wherein importers and exporters will themselves assess payment of duty.

There will be change in excise duty. The standard rate of central exercise duty will be maintained at 10%. A 1% central excise duty on 130 items entering the tax net. Basic food and fuel and precious stones, gold and silver jewellery will be exempted and there will be no change in CENVAT rates. (Excise duty retained at 10%, more items to be taxed)

A new scheme is to be introduced for refund of service tax on the lines of drawback of duties, he announced. Also, capital investment in fertiliser production will be considered as infrastructure sub-sector, Pranab said.

Tax-free bonds of Rs 30,000 cr will be issued for infrastructure development which will cover Warehousing Corporation, NHAI, IRFC and HUDCO.

EDUCATION: A Rs50cr grant is being allocated to Aligarh Muslim University centres in Murshidabad in West Bengal and Malappuram in Kerala. Also, the government has decided to allot Rs 200 cr to IIT Kharagpur. ( 24% hike in allocation for education )

GROWTH: Predicting growth patterns over the next fiscal, Pranab said the overall economic growth in the current fiscal was expected at 8.6 %, agriculture growth at 5.4 %, industry at 8.1 % and services 9.3 %. In the next fiscal, economic growth was likely to be 9%, he said. ( Economy grew 8.2% in last 2010 quarter )

"I see Budget 2011-12 as transition towards more transparent and result-oriented economic management," he said adding that stronger fiscal coordination was needed.

He said that corruption continued to be deterrent in the country's development and had to be fought extensively.

Pranab Mukherjee said the government plans to create a Women Self Help Group development fund with a corpus of Rs 500 crore. There is also a proposal to increase rural housing fund to Rs 3,000 crore. ( Low-cost housing loans of Rs 15 lakh to get 1% interest sop )

He also announced benefits for Below Poverty Line families by allowing direct transfer of subsidies in kerosene and LPG for such individuals.

Also, NABARD capital base will be strengthened and Rs 10,000 cr will be provided to it as short term credit fund.

Pranab announced the formation of Indian micro finance equity with SIDBI at Rs 100 crore. Another Rs 6,000 cr will be given to public sector banks to maintain capital-to-risk assets ratio norms, he said. ( Rs 500 cr for Regional Rural Banks )

A budget allocation of Rs 100 cr has been made for Ladakh and Rs 150 cr for Jammu for implementation of projects identified by taskforce.

Saturday, February 26, 2011

Gold and silver have been sought and prized since prehistoric times. They have also been both a cause of war and a medium of exchange.

Gold has traditionally been the standard by which the value of anything is assessed; it has also been a universally accepted medium of exchange. Silver does not lag far behind in the history of global trade. In fact, till the nineteenth century silver was actually more widely employed than gold as the standard of value.

The Indians' faith in God and gold dates back to the Vedic times; they worshipped both. Historian Pliny complained that her Indian trade drained ancient Rome's bullion resources. Indian merchants always demanded payment in silver during the times of the East India Company; so much silver was exported from London [ Images ] that East India Company teetered on the brink of financial disaster.

According to the World Gold Council Report, India stands today as the world's largest single market for gold consumption. In developing countries, people have often trusted gold as a better investment than bonds and stocks, particularly because historically these acted as a good hedge against inflation. In that sense these metals have been more attractive than bank deposits or gilt-edged securities.

Why people buy gold

Despite recent hiccups, gold remains an important and popular investment for many reasons:

In many countries gold continues to be an integral part of social and religious customs, besides being the basic form of saving. This continues to be exceptionally true in India, which is the world's largest consumer of gold. Shakespeare called it 'the saint-seducing gold'.

Superstition about the healing powers of gold persists. Ayurvedic medicine in India recommends gold powder and pills for many ailments.

Gold is indestructible. It does not tarnish and is also not corroded by acid - except by a mixture of nitric and hydrochloric acids.

Gold has aesthetic appeal. Its beauty recommends above all other metals for ornament making.

Finally, gold is scam-free. So far, there have been no Mundra-type or Mehta-type scams in gold.

Thus, the lure of this yellow metal continues.

On the other hand, it is interesting to note that apart from its aesthetic appeal gold has no intrinsic value. You cannot eat it, drink it, or even smell it. This aspect of gold compelled Henry Ford [ Images ], the founder of Ford Motors, to conclude that 'gold is the most useless thing in the world'.

The returns from gold

During the 1950s, gold appreciated only marginally; from Rs 99 per 10 gms in 1950 to Rs 111 per gms in 1960. During the next decade, from 1960-70, it moved up to Rs 184.

Between 1970 and 1980 came the massive rise from Rs 184 to Rs 1,330.

During the 1980s, it moved up another 240 per cent. The trend of gold prices in India in the last few years is given in Table 1 which reveals that between 1950 and 2007 gold appreciated 95-fold, an annual compound rate of return of 8.32 per cent.

Gold prices in India

March end

Gold price per 10 gm (Rs)

1925

18

1930

18

1935

30

1940

36

1945

62

1950

99

1955

79

1960

111

1965

71

March end

Gold price per 10 gm (Rs)

1970

184

1975

540

1980

1,330

1985

2,130

1990

3,200

1995

4,658

1996

5,713

1997

4,750

1998

4,050

March end

Gold price per 10 gm (Rs)

1999

4,220

2000

4,395

2001

4,410

2002

5,030

2003

5,260

2004

6,005

2005

6,165

2006

8,210

2007

9,500

How to buy gold

Gold Deposit Scheme

Introduced in 1999, this scheme is managed by SBI [ Get Quote ]. Individuals, HUFs, trusts and companies can deposit a minimum of 200 gm of gold with no upper limit, in exchange for gold bonds carrying a tax-free interest of 3 to 4 per cent depending upon the tenure of the bond ranging from 3 to 7 years.

Furthermore, these bonds are free from wealth tax and capital gains tax. The principal can be collected back in gold or cash at the investor's option.

Buying gold bars and coins

You can now also buy gold coins or bars/biscuits from various authorised banks and dealers. So, if you too are touched by the yellow fever, well, you could satisfy fascination by keeping some gold coins and bars with you.

Incidentally, don't be mistaken into thinking that buying ornaments is the same as investing in gold. In practice, gold converted into ornaments is rarely sold. Thus, though gold ornaments are a liquid asset their sale usually entails a heavy loss. The making charges are a total write-off. Then, too, your jeweller may take undue advantage of your predicament and buy back the ornaments at a discount.

Gold exchange-traded funds

The modern international method of investing in gold is via gold mutual funds. India should soon be catching p in this area.

In his Union Budget for 2005-06, Finance Minister P Chidambaram [ Images ] had proposed that Securities and Exchange Board of India should permit mutual funds to introduce Gold Exchange Traded Funds (Gold ETFs) with gold as the underlying asset.

According to the Budget proposals, the scheme would enable households to buy and sell gold in units for as little as Rs 100 and such units could be traded in the same manner as units of mutual funds.

Gold Exchange Traded Funds are a relatively recent phenomenon even in the American market where the first Gold ETF--StreetTracks Gold--made its debut in the New York Stock Exchange in November 2004. Each unit of the StreetTracks Gold ETF represents one-tenth an ounce of gold.

In Gold Exchange Traded Fund, the underlying asset is exclusively gold bullion, and not a basket of stocks as is the case of equity ETFs. Gold ETFs are shares or units of gold that are owned by investors and are fully backed by gold bullion bars held by a custodian.

Like other ETFs, they are traded on a stock exchange.

Gold ETFs will allow investors to buy gold in small increments. In the global market, one unit represents one-tenth of an ounce fine gold (1 oz-28.35 grams). If an investor in the fund holds 100 units, the fund must have physical gold worth 10 ozs.

The value of the unit will move in accordance with the price of gold. Just like mutual funds, the value per unit will be the total value of the gold held, divided by the number of units, minus the expenses of the fund. Gold ETFs, like any share, can be traded and bought by the investors through their stockbrokers.

They can be used for speculating in the short-term for betting on the price of gold, or it can be used for long-term investing. Just like the ETFs, Gold ETFs can be open-ended funds or closed ended funds.

In India, the ETF structure may be particularly suitable for a gold fund because of the unavailability of a highly liquid, organized market for gold or gold-backed securities.

Tax implications

Since there is no income as such from holding gold, there is no liability of income tax. But bullion and jewellery are subject to capital gains tax and wealth tax, without any exemptions whatsoever.

While determining the value of gold ornaments for the purpose of wealth tax, making charges should be ignored, unless the ornaments are studded with precious stones. The value of gold contained in the ornaments can be reduced by 15 to 20 per cent because the dealer invariably deducts 15 per cent of the ruling rate of standard gold when ornaments are sold in the open market.

The prospects for gold

Many contemporary investors forget that when gold price went up during the late 1970s, the metal was just trying to catch up with prices of other things, which had already gone up.

In 1970, when the price of gold was $35 an ounce (due to the gold standard then followed in usa), it was unquestionably undervalued. When gold hit $850 an ounce in January 1980 it was again, unquestionably, overvalued.

If the increase in gold price had kept the same pace in 1980s and 1990s as it did in 1970s, it would have become $20,000 an ounce by 2000. With a number of Central Banks selling off huge chunks of their gold reserves, the international price of gold has come down in the last few years.

Timothy Green, a well-known gold expert, reminds us of a historical truth: 'The great strength of gold throughout history has not been that you make money by holding it, but rather you do not lose. That ought to remain its best credential'.

A research study on gold established a remarkable consistency in the purchasing power of gold over four centuries. Its purchasing power in the mid-twentieth century was found to be nearly the same as in the middle of the seventeenth century.

You can safely invest in gold. But take care to keep your jewellery in bank lockers. You can also raise loans on gold for your other portfolio investments. If the Indian economy continues to be liberalised and unshackled fast, several new options may emerge for investors to invest in gold bars, gold coins, gold funds, gold mining companies and gold options.

It will also lead to the eventual equalisation of domestic and international prices.

N J Yasaswy is a Founder-Governor of the Institute of Chartered Financial Analysts of India and ICFAI Business School and has written several books on finance and investments.